High Dividend Stocks 101

The Home Depot (HD) is the largest home improvement specialty retailer in the world. That’s the good news–and the bad news. On the positive side, they are the gorilla in the home improvement world room, with well over 2,200 locations throughout the U.S., Canada, China, and Mexico.

On the negative side, well… I’m not sure how to put this. I really can’t say much about Mexico, and I actually like the longer-term outlook for both Canada and China, but I am much less confident about the U.S. Sure, the Fed Chairman and the tax-cheat at treasury continue to assure us, but it just feels to me like they’ve got a tiger by the tail and don’t know how to let go without being eaten alive.

Then Warren Buffett tells us not to bet against the U.S. I know he’s a genius, or at least the investing equivalent, and I don’t question his integrity. Still, nothing like this has happened in his investing lifetime, and I’m not sure that even he understands what the results of this crash and bailout will be when when all is said and done.

So today, trading at $21.68, and with a dividend of 3.9%, I think Home Depot is probably the most appealing buy in the home improvement area. I just can’t see my way clear to invest now in a stock so dependent on credit, home prices, and the overall U.S. economy.

consumer goods consumer goods, economy, HD, Home Depot, home improvement

Kraft (KFT) owns an impressive array of brands including Kraft, Maxwell House, Nabisco, Oreo, Oscar Mayer, Philadelphia Cream Cheese, as well as dozens of additional brands. 

The stock, at $28.67, is down just a little from when it was spun off from Altria in 2000.  That really makes them no better or worse that most of the market.  What may make them better is the current dividend of about 4%.  Certainly many stocks that have gone nowhere in the last decade offer lower (or no!) dividends.

If we face continuing recession or worse, Kraft, selling foods and beverages, should be better positioned than many companies to survive.  If inflation becomes more dominant, their brands should offer some pricing power–perhaps enough to maintain current levels of profitability.

In any normal type of market I’d love to buy Kraft at this price.  In this market, and especially this week, I wonder how much lower earnings will drop, and how much the PE (now about 13) will rise.  For now, Kraft stays on my watch list.  How about you?

consumer goods consumer goods, KFT, Kraft, packaged foods